Moody's cuts Provident ratings

Moody's Investors Service downgraded the long-term debt ratings of Provident Financial Group Inc. including cutting its senior debt to Ba1 from Baa3, trust preferreds to Ba2 from Ba1 and Provident Bank's senior debt to Baa3 from Baa2 and subordinated debt to Ba1 from Baa3. The outlook is stable.

The action concludes a review for possible downgrade that commenced on March 5 in which Moody's focused on the adequacy of restated core earnings in providing protection to creditors related to the current risk profile.

The downgrade was based on a view that financial protection was weaker because the lower restated core earnings were not fully compensated by improvements in Provident's risk profile, Moody's said.

Provident's change in business mix away from national business lines to local retail banking was positive, but it will likely take some time before the change will result in improved core earnings.

Moody's expects Provident's risk profile to improve, but asset quality indicators to remain weaker than average.

Moody's confirms ProSiebenSat.1

Moody's Investors Service confirmed ProSiebenSat.1 Media AG's senior unsecured bonds at Ba3. The outlook is negative.

Moody's comment follows the announcement that negotiations between Kirch Media creditors and Saban Capital Group have ended.

Moody's said that the rating is supported at the Ba3 level by the expectation that ProSiebenSat.1 would benefit in the short-term from a significant increase of equity capital which would reduce leverage and secure its bank financing arrangements. The rating also anticipates that ProSiebenSat.1 would not become subject to any onerous commitments in relation to Kirch Media's rights library, and that its access to programming from the library would remain uninterrupted.

The rating agency said that it anticipated shortly public confirmation of the plans of Kirch Media and the Kirch Media creditor banks with regard to Kirch Media's 52.5% holding in ProSiebenSat.1 following termination of the Saban negotiations. To the extent there were to be a delay in the plans, whether in terms of announcement or execution, that would increase the negative pressure on the rating in the short-term.

The Ba3 rating does not leave room for delay in any planned recapitalization of ProSiebenSat.1, whether through the possible emergence of a third bid, or other reason, Moody's added.

The negative outlook reflects ongoing pressure on the Ba3 rating from the challenging operating environment, and uncertainties over future ownership, Moody's said. It also takes account of the execution risk on the anticipated capital increase and the pressure on the group's financing arrangements from its deteriorating leverage profile in recent months.

Moody's rates Waterford notes B1

Moody's Investors Service assigned a B1 rating to Waterford Gaming, LLC's and Waterford Gaming Finance Corp.'s proposed $150 million senior notes due 2012 and confirmed Waterford's existing ratings. The outlook is stable.

Moody's said the rating considers Waterford's reliance on a single source for its cash inflows, the Mohegan Tribal Gaming Authority, operator of the Mohegan Sun casino in Connecticut. The rating also takes into account that Waterford is not a bankruptcy remote entity and could potentially be drawn into a bankruptcy or similar event by its parent, Waterford Group, LLC.

Additionally, there is significant recovery risk under a default scenario.

Positive ratings consideration is given to the historical and expected performance of the Mohegan Sun casino, as well as the restrictive covenants contained in the new senior note indenture that prohibits other business activities and the incurrence of additional debt and limits restricted payments, Moody's said.

Additionally, the senior note indenture includes a cash flow sweep mechanism that should result in a fairly rapid de-leveraging. Pro forma for the new note offering, debt/EBITDA will be slightly above 6.1x.

The stable ratings outlook takes into account the favorable demographics of the Connecticut gaming market as well as a limited amount of competition, Moody's said. Currently, Foxwoods is Mohegan Sun's only real competitor.

S&P rates AES China notes B+

Standard & Poor's assigned a B+ rating to AES China Generating Co. Ltd.'s planned $200 million senior unsecured notes due 2010 and confirmed its existing ratings including its corporate credit at B+. The outlook is stable.

S&P said AES China's ratings reflect uncertainties about power industry reforms in mainland China, the relative weakness of the parent company and refinancing risk. The proposed issue will not amortize but instead be redeemed by a single repayment in 2010, which will expose the company to some refinancing risk. In addition, the covenants governing the existing $180 million issue will be substantially relaxed, thereby removing most of the cash trap mechanisms and giving the company greater flexibility to return cash through dividends to AES Corp.

Liquidity may become tighter over the next few years as the company relies more on cash contributions from projects, S&P noted.

Ongoing power industry reforms in mainland China remain a key concern, although S&P said it expects the implementation of a power pool system to be a gradual process.

Moody's cuts CE Casecnan

Moody's Investors Service downgraded CE Casecnan Water and Energy Co., Inc.'s senior secured notes rating to B2 from Ba2. The outlook is negative.

Moody's said the downgrade was prompted by CE Casecnan's report that the National Irrigation Administration of the Philippines has not paid the monthly invoice for water and electricity fees that was due on May 28. The invoice is for $10.8 million, of which $3.6 million is related to the tax compensation portion of the water delivery fee.

The National Irrigation's non-payment occurs amidst the background that National Irrigation has filed an Answer and Counterclaim and subsequently a Supplemental Counterclaim to existing arbitration proceedings with CE Casecnan, seeking to declare the project agreement void. CE Casecnan initiated arbitration against National Irrigation in August 2002 concerning failure of National Irrigation to compensate CE Casecnan for taxes paid by CE Casecnan during construction of the project.

Moody's says the rating reflects the tight liquidity at CE Casecnan and that CE Casecnan might experience difficulty in honoring its debt service obligations this coming November if National Irrigation does not honor its payment obligations to CE Casecnan.

Moody's said that while MidAmerican Energy Holdings Co. (Baa3) has provided support to CE Casecnan in the past, it understands that MidAmerican is under no formal obligation to provide such support and it is uncertain at this stage if any support will be rendered.

Moody's cuts Bauang Private Power, still on review

Moody's Investors Service downgraded Bauang Private Power Corp. to Ba3 from Ba1 and kept it on review for possible downgrade.

The downgrade reflects that the project is not exempted from contract renegotiation even when the offtaker is National Power Corp., Moody's said.

Moody's said that the contract re-negotiation with Power Sector Assets and Liabilities Management Corp. is still proceeding and it is difficult to predict the renegotiation outcome.

Moody's said the ongoing reforms in the power sector has created uncertainty to the project, and it is particularly concerned over the outcome of the re-negotiation with PSALM over some of the key terms including the buy-out price.

Moody's puts Hankyu on upgrade review

Moody's Investors Service put Hankyu Department Stores, Inc.'s senior unsecured debt at Ba1 on review for possible upgrade.

Moody's said the action reflects Hankyu's improved cash flow and credit profile, despite weak consumer spending and intensified competition within Japan's retail industry.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.